Nov 9, 2012

Vietnam - Lacking capital, power projects reach deadlock

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VietNamNet Bridge – A series of thermo and hydro power plant projects have been going slowly at a snail’s pace because of the lack of investment capital. Some contractors have even run away from the construction sites.

Power projects need money to run

Le Quang Hao, General Director of the Finance and Energy Development Company, the investor of Tr’Hy hydropower plant in Tay Giang district of Quang Nam province complained that the project has made no move ahead because of the lack of capital.

Before kicking off the hydropower plant project, the investor signed the contracts on the project funding with some commercial banks. However, since early 2011, the economic recession has badly affected the project implementation. The interest rate climbed to 21 percent per annum, while banks have stopped the disbursement.

“The overly high interest rates have slowed down the project implementation. Meanwhile, it takes too much time for the site clearance,” Hao said.

Tr’Hy hydropower project is capitalized at 763 billion dong. However, to date, only 90 billion dong has been disbursed.

Dak My 2, Dak My 3 power projects have also reached a deadlock because of the lack of capital. Nguyen Canh Huong, the representative of Dak My 2’s investor, said the bank loan interest rates were overly high, which were unbearable for the investor. However, he has promised that the investor would accelerate the project implementation, as the bank loan interest rates have decreased significantly.

The three said power projects have the expected investment capital of 4 trillion dong. However, only 320 billion dong has been disbursed over the last five years, since the day the projects got started.

However, local authorities keep a firm stand that investors have to try to speed up the projects no matter what.

Deputy Chair of the provincial people’s committee Dinh Van Thu told the investors: “If you find it impossible to implement projects, you would be better to quit them”.

Nguyen Quang Thu, Director of the Quang Nam provincial Industry and Trade Department, said if investors want to continue the projects, they need to make commitments about the project pace and show the credit contracts signed with commercial banks.

The written commitments must be submitted to the provincial authorities prior to November 15, which would be considered by the authorities to make decisions on whether to allow the investors moving ahead with the projects.

Contractors flee for their lives

Chinese CHMC, which won the bid to execute the 30 MW Nong Son thermopower plant capitalized at 674 billion dong and invested by the Vietnam Coal and Mineral Industries Group (Vinacomin), started the construction in 2008 and promised to finish the work in late 2010.

However, the project has been left half-done, since the contractor has left, while all Chinese workers have left Vietnam. It’s because of the lack of capital.

Vo Dinh Dat, Deputy Director of the Nong Son – Vinacomin Coal and Power Company, said that the financial crisis has dealt a strong blow on the contractor and forced the group to give up the project.

Not only hydropower and thermopower plant projects, a lot of other investment projects in the coastal areas have been going at a snail’s speed over the last tens of years.

1 USD = 21,000 VND.

Vu Trung

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